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HQ 555028


October 31, 1988

CLA-2 CO:R:C:V 555028 DBI

CATEGORY: CLASSIFICATION

TARIFF NO.: 9802.00.80; 807.00

District Director of Customs
El Paso, Texas 79985

RE: Reconsideration of Internal Advice 56/87 Regarding the Applicability of subheading 9802.00.80, HTSUS, to Certain Belt Loops

Dear Sir:

This is in response to your memorandum of March 14, 1988, in which you request reconsideration of our decision on Internal Advice 56/87 dated February 1, 1988 (HQ 554812). That decision concerned the applicability of item 807.00, Tariff Schedules of the United States (TSUS), to belt loops made in Mexico from component materials of U.S. origin.

FACTS:

The facts of the manufacturing process are not in dispute and those facts, as set forth in our decision dated February 1, 1988, are incorporated by reference herein. The basis for your reconsideration request is that our decision in IA 56/87 is inconsistent with our decision in IA 85/85 dated January 14, 1986 (HQ 553959), in which we held that the process of making certain belt loop strips from material exported to Mexico constitutes a fabrication and cannot be considered incidental to the assembly operation. You point out that IA 85/85 and IA 56/87 involve the same steps in making belt loop strips, except that in this case a lining has been added which makes the actual belt loops thicker and firmer. Your office recommends that IA 56/87 be reversed and that the process of manufacturing belt loops be considered a fabrication, thereby precluding item 807.00, TSUS, treatment for these components.

ISSUE:

Whether the belt loops, when returned to the U.S., are eligible for the partial duty exemption in subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) (807.00, TSUS).

LAW AND ANALYSIS:

As you are aware, the HTSUS will replace the TSUS, effective January 1, 1989. Item 807.00, TSUS, will be carried over into the HTSUS without change as subheading 9802.00.80. Subheading 9802.00.80, HTSUS, applies to articles assembled abroad in whole or in part of fabricated components, the products of the U.S., with no operations performed thereon except the attachment of the components to form the imported merchandise and operations incidental thereto. An article classified under subheading 9802.00.80, HTSUS, is subject to duty upon the full appraised value of the imported article, less the cost or value of such products of the U.S. Section 10.14(a), Customs Regulations (19 CFR 10.14(a)), provides that the components must be in condition ready for assembly without further fabrication at the time of their exportation from the U.S. to qualify for the exemption.

In the present case, you do not dispute that the belt loop strip and the lining material are two separate components that are joined. However, it is your position that the sewing of the belt loop strips end-to-end in preparation for assembly shows that they are not fabricated components exported ready for assembly, nor is this an operation incidental to assembly, citing IA 85/85.

IA 85/85, (HQ 553959 dated January 14, 1986), held that no allowances could be made under item 807.00, TSUS, for belt loops made in Mexico for use in the assembly of jeans that were returned for sale in the U.S. In that case, the belting fabric material was cut to length and width before it was exported to Mexico. The foreign processing consisted of placing the exported fabric material on a two-needle chainstitch sewing machine which folded the material upon itself and also stitched the folded strip into a roll of belt loop material. Then the length of the sewn belt loop material was mounted on an automated belt loop attaching machine which cut the loop material to length and, at the same time, attached the cut lengths of belt loops by two bartacks to the trouser in a machine cycle. In IA 85/85, we reasoned that the manufacturing of the belt loop strips from the exported fabric in the manner described was not an assembly operation. It is clear from the facts that the belt loop fabric was folded and sewn to itself which is not an acceptable assembly operation under item 807.00, TSUS. See HQ 554653 (July 17, 1987).

In the present case, the strip of belt loop material is chemically fused together with the inner lining material, a process which you do not dispute constitutes the joining of two materials. Thus, the distinction between the facts of the two cases is that, in the instant case, the belt loop material is fused with inner lining material while in HQ 553959 the belt loop material is sewn to itself. In HQ 554812, we held that the joinder of the belt loop fabric and the lining materials constituted a subassembly of components, and the cutting of the belt loops from the continuous lengths constituted an operation incidental to this subassembly. This is still our position regarding those processes.

With regard to the sewing together of the belt loop strips end-to-end to form the continuous chain of belt loop material, it our opinion that this is an operation incidental to the subassembly of the belt loop fabric and the lining material. The sewing of the strips end-to-end does not further fabricate the material into a new article. The purpose of this operation is to facilitate the subassembly of the belt loop fabric and the lining. Making a continuous chain of belt loop material makes it easier to feed the material into the fusing machine. Therefore, this operation does not preclude the belt loops from receiving subheading 9802.00.80, HTSUS, treatment.

HOLDING:

For the reasons set forth above, we reaffirm our prior ruling granting allowances under subheading 9802.00.80, HTSUS, for the exported belt loop components of U.S. origin.

Sincerely,


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